Verizon drops $2 payment fee in face of FCC scrutiny, public outcry

Verizon will charge customers a $2 fee for processing some one-time payments, …

On Thursday, wireless telecom giant Verizon Wireless said it would begin charging consumers a $2 "convenience fee" for some bill payments starting January 15. That decision, which Verizon said was necessary to cover the costs of processing some payments, caught the attention of the Federal Communications Commission. Verizon then decided the fee wasn't such a hot idea after all.

In a press release posted Friday afternoon, the wireless provider announced that customer feedback had led to a change in plans. “At Verizon, we take great care to listen to our customers. Based on their input, we believe the best path forward is to encourage customers to take advantage of the best and most efficient options, eliminating the need to institute the fee at this time,” said Dan Mead, president and chief executive officer of Verizon Wireless in a statement.

An FCC official told the New York Times on Friday that it would "look into" the $2 charge, which would apply to any customer making one-time payments online or over the phone using credit or debit cards. Even as it took a beating on Twitter, Verizon initially defended itself, saying it would go ahead with the fee. "Customers have a number of alternatives to pay their bill and not incur the convenience fee," Verizon spokesperson Brenda Raney told Bloomberg. "Paying the fee is an option, not an absolute."

Eric Bangeman
Eric has been using personal computers since 1980 and writing about them at Ars Technica since 2003, where he currently serves as Managing Editor. Twitter@ericbangeman

That's sort of odd, it would seem to me that a customer making an online payment or credit card phone payment would be more convenient from Verizon's standpoint than...say paying by writing in a check that has to go through accounts receivable check processing. Am I missing something?

That's sort of odd, it would seem to me that a customer making an online payment or credit card phone payment would be more convenient from Verizon's standpoint than...say paying by writing in a check that has to go through accounts receivable check processing. Am I missing something?

The only "convienence fee" I get charged is ironically enough, paying taxes with a credit card. My power company, water, etc... don't do that. My state government charges because they outsourced their credit card processing to a third company that charges (which is ridiculous, the goddamn state government can afford a merchant license...). This is also the same state government that built a wonderfully easy to use online tax system, and was then convinced by Turbotax/HR block/et all to shut it down so we can give more money to accountants instead.

I hope you're happy, Delegate Kathy Byron. Those kickbacks had better have been worth it.

So what I'm hearing is, they want all of their customers going directly to the stores, so the store associates can't do anything except process bill payments.

No, the fee was for one time payments only. You could get around by signing up for automatic bill pay where they charge you every month. So basically, they're trying to force you to sign up for auto-pay, which not everyone wants to do. For example, I prefer to pay my bills as one-time payments so that I don't get overcharged when they make a mistake and then have to wait for a refund (as opposed to fixing the mistake and THEN paying the bill) and so that I can control when the charges will hit my account.

That's sort of odd, it would seem to me that a customer making an online payment or credit card phone payment would be more convenient from Verizon's standpoint than...say paying by writing in a check that has to go through accounts receivable check processing. Am I missing something?

Verizon pays a processing fee for debit and credit payments, like any other retailer. I would assume by the "one-time" wording that Verizon must have some sort of financial incentive for automatic recurring payments. Check processing may not be an issue, mainly because it is highly unlikely Verizon handles that in-house, and they probably pay a very low per-transaction fee rather than a percentage fee like electronic transactions.

My power company, rent and ISP ALL charge a "convenience" fee for using online credit card transactions.

Where do you live? None of the above charge me a fee.

I used to use DirecTV, and they would charge a fee for calling in and paying through a live operator, but not for online. They actually wanted to encourage people to take the route that would cost them less, not punish them for doing so.

You'd think these companies would learn that adding inane an unfair fees to their services always seems to end with an about face, and just not try in the first place. All they end up doing is looking like complete tools.

But it's nice to see public outcry is working occasionally, lets keep it up.

The only "convienence fee" I get charged is ironically enough, paying taxes with a credit card. My power company, water, etc... don't do that. My state government charges because they outsourced their credit card processing to a third company that charges (which is ridiculous, the goddamn state government can afford a merchant license...). This is also the same state government that built a wonderfully easy to use online tax system, and was then convinced by Turbotax/HR block/et all to shut it down so we can give more money to accountants instead.

I hope you're happy, Delegate Kathy Byron. Those kickbacks had better have been worth it.

Depending on your state, the government might not be allowed to have a merchant license for payment processing. I work on county government websites and do a lot of interfacing with payment processors. A lot of the time who they can use, how much of a fee they can charge, and what they can do is regulated. The reason for the regulation is almost always that the market will do it better.

The only "convienence fee" I get charged is ironically enough, paying taxes with a credit card. My power company, water, etc... don't do that. My state government charges because they outsourced their credit card processing to a third company that charges (which is ridiculous, the goddamn state government can afford a merchant license...). This is also the same state government that built a wonderfully easy to use online tax system, and was then convinced by Turbotax/HR block/et all to shut it down so we can give more money to accountants instead.

I hope you're happy, Delegate Kathy Byron. Those kickbacks had better have been worth it.

Not to defend the government, but outsourcing payment processing makes sense in many situations, least of all to avoid PCI (Payment Card Industry) compliance audits.

“At Verizon, we take great care to listen to our customers. Based on their input, we believe the best path forward is to encourage customers to take advantage of the best and most efficient options, eliminating the need to institute the fee at this time,” said Dan Mead, president and chief executive officer of Verizon Wireless.

If Verizon really wants to make a quick two bucks from their customers, they would strap Dan Mead into the stirrups of a birthing chair and charge interested customers two dollars to kick him right in the groin.

Sounds like the lesson here is, if you are a vendor, hide the cost of payment processing from customers. Most customers don't care about efficiency, they just don't like thinking they're getting cheated.

Maybe another lesson is "poll your customers for their preferences before making changes to fees and prices."

Verizon has roughly 107 million mobile customers.Of course not everyone would be charged this fee, but even if half these customers paid the $2 fee, that would make for a nice little cash grab, or a very moderate CEO bonus.

This is why I've never owned a cell phone.I refuse to pay ridiculous money for the convenience of having an f'ing cell phone.

The only "convienence fee" I get charged is ironically enough, paying taxes with a credit card. My power company, water, etc... don't do that. My state government charges because they outsourced their credit card processing to a third company that charges (which is ridiculous, the goddamn state government can afford a merchant license...). This is also the same state government that built a wonderfully easy to use online tax system, and was then convinced by Turbotax/HR block/et all to shut it down so we can give more money to accountants instead.

I hope you're happy, Delegate Kathy Byron. Those kickbacks had better have been worth it.

Depending on your state, the government might not be allowed to have a merchant license for payment processing. I work on county government websites and do a lot of interfacing with payment processors. A lot of the time who they can use, how much of a fee they can charge, and what they can do is regulated. The reason for the regulation is almost always that the market will do it better.

I find it hard to believe that a $5 fee on top of your tax to pay by credit card is a seller example of the markets being more efficient. The upshot is that I always mail my stuff instead, which means the government has to pay someone to open the envelope, deal with the check (potentially lose it), and manually handle the paperwork.

My power company, rent and ISP ALL charge a "convenience" fee for using online credit card transactions.

Where do you live? None of the above charge me a fee.

I used to use DirecTV, and they would charge a fee for calling in and paying through a live operator, but not for online. They actually wanted to encourage people to take the route that would cost them less, not punish them for doing so.

This is nothing more than mobocracy. If you don't like the $2 fee don't use Verizon. Nobody's forcing you

When every telco wraps their customers up in a 2-year contract there isn't a whole lot of option now is there? It was a money-making ploy from Verizon and even though I'm not one of their consumer customers (my work tablet is through them) I'm happy that public outcry won out. If not, the other major players may have run with the idea as well.

Remember Verizon is the same shitty company that used to block Bluetooth from every phone and more recently blocked the real Skype from all their Android phones for over a year. (They offered the crippled "Skype for Mobile" that was a low-quality cellular call instead of the CD-quality Skype call everyone else got.)

Is anyone surprised anymore when they demonstrate how customer-hostile they are?

"Customers have a number of alternatives to pay their bill and not incur the convenience fee,"

LoL

Lets get this straight, just how is using a credit or debit card, the two most common payment methods today, somehow worthy of a "convenience fee" just to pay your bill when they already charge you for your service which includes processing your bill payments?

Sounds more like the "convenience" part comes in that they want to "convenience" of making money off the fact that the most common forms of payment is from credit or debit card. Its pretty "convenient" that they have the luxury of making extra money for doing nothing.

If they have to pay a processing fee for processing a credit or debit card payment thats their problem, they are the ones in business and should have known this on the front end. You got the service already, the price for that service should have taken this into account and a person should not be charged extra just to pay their bill.

They call it a "one time payment", it isn't a "one time payment", its a recurring monthly charge for the service, so its a recurring payment no matter what the method of payment is. Its a way to get people to sign up for "automatic bill pay" so they will have access to your account and be able to debit your account at their leisure, or before you can get rid of their service if you decide to change carriers. You would be suprised at the number of people this happens to, they change providers and pay what they think is their final (and should have been final) bill with them, but depending on when they decide to debit your account they will take out another bill in addition. The majority of people never challenge it, and when they do they spend months of run around just to get their money back, in the mean time that money is setting in the carriers bank account and drawing interest for them. I've had my experiences with "automatic bill pay" , its more like "automatic bill screwing".

Being a Web Architect who has set up systems that collect payments from customers, I can attest that most payments are charged based upon a percentage of the transaction and 1.8 % is the most common. That would mean you'd have to make a 100 $ payment to have a 1.80 $ interchange fee.

Server costs on a per-transaction basis (equipment, software support, security guards, and electricity to run the machine and the cooling) usually amount to a couple pennies due to the volume of transactions. (Economies of scale)

Even if we allowed .05 for this cost, you'd have to make a payment of 108.33 $ for there to be a reasonable "justification" for a 2$ charge.

However, even that ignores a very pertinent fact. By making an automated payment, they save what is probably a 3 minute phone call to collect that information from you

Even if you paid an agent at minimum wage, a three minute call for ONE transaction (and assuming that you somehow avoided the interchange fee, which you wouldn't) would cost you about 75 cents to collect that one payment. (7,25 per hour, times 2 for loaded cost minimum, times 1/60th, times 3)

The fact that a customer has an automated system to complete this payment saves the company that cost each time a customer utilizes it.

Thus, if you're expected to pay enough to justify a 2$ charge, you have to in effect pay enough to justify a 2.75 $ charge. That just happens to come out perfectly to a 150 $ bill.

If your phone bill is 150$ - more power to you.

Furthermore, I firmly believe that any such cost - justified or not - should never be passed to a customer. It is quite simply - the cost of doing business. Yes, they get passed eventually in the way of increased rates on your bill, but tacking up these supposed costs and putting them to customers is additional "padding".

This is nothing more than mobocracy. If you don't like the $2 fee don't use Verizon. Nobody's forcing you

When every telco wraps their customers up in a 2-year contract there isn't a whole lot of option now is there? It was a money-making ploy from Verizon and even though I'm not one of their consumer customers (my work tablet is through them) I'm happy that public outcry won out. If not, the other major players may have run with the idea as well.

I can give you a list of dozens of MVNO's that don't require 2 year contracts.

Secondly, no one is stopping you from paying for the phone full price. All you have to do is ask. Boom no 2 year contract.

This is nothing more than mobocracy. If you don't like the $2 fee don't use Verizon. Nobody's forcing you

Except if you don't want to be fucked in the ass for leaving in the middle of a contact

Your only option would be to as people said "auto pay" which actually in 8 months have had 3 run ins with verizon concerning my bill; all which they over charged me, and I refused to pay until an associate heard the story from my mouth. There is absolutely no way I could of done that with auto bill pay, and rest assured when my contract is up my business with them will be over.

While it's true that there are processing fees, I have a hard time believing that this is more expensive than paying a rep at each store to process the bills, or a bunch of people opening envelopes, manually entering in payments, and processing checks.

I was actually kind of looking forward to someone organizing a single day for EVERYONE to head into the nearest Verizon store to pay their bills via check or loose change.

That's sort of odd, it would seem to me that a customer making an online payment or credit card phone payment would be more convenient from Verizon's standpoint than...say paying by writing in a check that has to go through accounts receivable check processing. Am I missing something?

Okay, but those processing fees in no way cost 2 dollars and it's got to be cheaper than paying more employees to process checks. It's just Verizon trying to make an extra buck fifty or so off most of it's customers.

That's sort of odd, it would seem to me that a customer making an online payment or credit card phone payment would be more convenient from Verizon's standpoint than...say paying by writing in a check that has to go through accounts receivable check processing. Am I missing something?

Okay, but those processing fees in no way cost 2 dollars and it's got to be cheaper than paying more employees to process checks. It's just Verizon trying to make an extra buck fifty or so off most of it's customers.

I've had numerous previous service providers that charged "convenience fees" for credit card payments by phone - given the instant nature of the transaction, it wasn't terrible. I'd rather not pay the added $2-$5, but the ability to pay immediately without cutting and mailing a check (or waiting for my bank's online bill payment system to do the same) - especially when my account was past due - was a great convenience.

Oftentimes, wireless carriers are calling you when you're past due to get a payment, which takes a good 5 minutes' of agent time.

I do wonder if the credit card payment processors extract a premium for real-time transactions for one-time pay by phone vs scheduled payments that can be processed during low-demand periods without immediacy.